"You can't visit Port Fairy without packing a snow jacket and a raincoat and don't even get me started on Dubbo.

"Queensland should occupy at least five of the top 10 positions."

Palm Cove is Queensland’s best performer in the Wotif Town of the Year list, but was only one of two places from the Sunshine State to make the top 10.

Wotif managing director Daniel Finch acknowledged Queensland's placing on the list could be controversial, but said Port Fairy deserved the title.

"While Queensland is undoubtedly a favourite with Aussies, the laid-back Victorian town of Port Fairy was crowned No.1 for its incredible coastline, art, culture and foodie scene - with growth soaring 45% year-on-year," he said.

"We're looking forward to seeing how next year's awards shape up and if Queensland can bring back the sunshine by taking out No.1 again."